Boris F.J. Collardi, Chief Executive Officer of Julius Baer Group, said: “On the back of a recovery in client activity and better cost efficiency, our Group markedly improved its operational performance in the first half of 2013. At the same time, we made tremendous progress in the integration of IWM, which makes us confident that we will achieve our goal of having 80% of targeted IWM client assets reported at Julius Baer by the end of this year.”
Total client assets amounted to CHF 304 billion, an increase of 10% since the end of 2012. Assets under management grew by 15%, or CHF 28 billion (USD 30 billion) , to CHF 218 billion (USD 233 billion). This included approximately CHF 24 billion (USD 25.65 billion) of AuM reported from IWM, of which CHF 12 billion (USD 12.82 billion) were booked on the Julius Baer platforms and paid for. A further update on IWM, including on AuM transferred after the end of June, is located towards the end of this media release.
Outside the contribution from IWM, the increase in AuM was the result of net new money of CHF 3.4 billion, a positive currency impact of CHF 2 billion as well as CHF 0.2 billion from the acquisition of a 60% equity participation in TFM Asset Management, partly offset by the disposal on 31 May 2013 of our former Italian onshore subsidiary Julius Baer SIM SpA, with CHF 1 billion in AuM, as well as by a marginally negative market performance of CHF 1 billion. The market performance was impacted by several clients’ exposure to underperforming asset classes such as emerging market securities and gold as well as by the global market corrections in June 2013, and occurred despite the fact that Julius Baer again achieved a clearly positive performance across practically all discretionary mandates it manages. Due to the Group’s strong focus on the successful transfer and integration of the IWM businesses, the pace of stand-alone net hirings of RMs decelerated somewhat, which was one of the factors behind the year-on-year slowdown in the net new money rate to 3.6% (annualised). Net new money was driven by continued net inflows from the growth markets and from the local business in Germany, while the inflows in the cross-border European business were offset by tax-driven outflows. Assets under custody came to CHF 86 billion, compared to CHF 88 billion at the end of 2012.
Adjusted profit before taxes went up by 28% to CHF 319 million (USD 341 million) from a restated level of CHF 249 million (USD 266 million) a year ago. The related income taxes increased from a restated level of CHF 41 million to CHF 57 million, representing a tax rate of 18%, up from a restated rate of 16.6%. Adjusted net profit consequently increased by 26% to CHF 261 million from a restated level of CHF 208 million, and, following the higher share count after the capital increases in October 2012 and January 2013, adjusted earnings per share came to CHF 1.23, up by 17% from a restated level of CHF 1.04.
IWM update
After the end of June 2013, a further CHF 22 billion (USD 23.5 billion) of IWM AuM were transferred to Julius Baer, taking total IWM AuM reported to CHF 47 billion, of which CHF 19 billion were booked on the Julius Baer platforms and paid for. Since the start of the IWM integration process on 1 February 2013, and including the additional transfer milestones reached in July 2013, a total of twelve IWM locations have now entered the transfer process. This encompasses the largest IWM locations in Switzerland, Uruguay, Singapore, Hong Kong and the UK, as well as two locations that are new to the Group, namely Luxembourg and Spain. Including the July transfers, the total number of IWM staff at Julius Baer has increased to 1,005 FTEs, of which 272 are relationship managers. As a result of the strong progress made to date, the Group reaffirms its target to acquire between CHF 57 billion and CHF 72 billion of IWM AuM by January 2015. Of this targeted range, 80% are expected to be reported and 70% to be booked on the Julius Baer platforms and paid for by the end of 2013. The estimate for the total IWM-related transaction, restructuring and integration costs to be borne by Julius Baer has been increased from approximately CHF 400 million to approximately CHF 455 million. This is mainly the result of higher estimated costs related to the client onboarding process. All other IWM-related targets are reaffirmed.